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Slow and ineffective by design

Good morning! NSW recorded another 16 new cases of COVID-19 yesterday, spreading from Bondi to the city's south-west. Apparently a super-spreader birthday party held on Monday, 40km south-west of Sydney's CBD, caused a large number of the new cases (10 so far), but there are also half a dozen or so cases that still have no known source.

As a result, the NSW government implemented travel restrictions, limits on gatherings and tightened mask wearing requirements, which now have to be worn in all indoor non-residential settings, including workplaces and outdoor events.

Get used to this, folks. Hotel quarantine is leaky and we're still at least several months away from being sufficiently vaccinated for authorities to 'let it ride' (see below). 😷

Markets

Daily % change

AUD/USD

75.8

+0.3%

10Y Bond

1.54

+0.7%

ASX200

7,299

-0.6%

Brent (bbl)

75.3

+0.3%

Gold (oz)

1,777

-0.1%

Iron ore (t)

209.4

+2.4%

Bitcoin

33,149

+0.8%

Note: Brent oil, gold bullion and iron ore prices are the second futures contract.

The US S&P500 followed Asian markets lower last night, inching down 0.11%, after it was reported that sales of new US homes fell to a one-year low in May and inflationary pressures are still simmering away.

Heating up: The preliminary IHS Markit/CIPS UK Composite Purchasing Managers' Index (PMI) for June showed that British firms' input costs equalled the previous record high from June 2008, with prices charged by firms the highest since the series began in 1999. The story was similar in the US, where the IHS Markit PMI's measure of prices paid by manufacturers rose to the highest level since the series started.

Iron ore windfall: Preliminary trade data showed a record $A13.3 billion merchandise trade surplus in May, with both the quantity and value of iron ore increasing in the month. Iron ore exports to China rose 20% to $A12.7 billion, the third consecutive monthly record.

Rates to rise: The Commonwealth Bank of Australia (CBA) pulled forward its forecast for a cash rate increase to November 2022, which it expects to be "followed by an increase of 25 basis points in December 2022. We have three further 25-basis-point hikes in Q1 23, Q2 23 and Q3 23". If the CBA is correct, that increase (1.15 percentage points) could cause the typical owner-occupier mortgage interest repayment to increase by 37.1% over the course of 10 months.


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Analysis

Slow and ineffective by design

Daily vaccinations have slowed following the Melbourne scare.
Daily vaccinations have slowed following the Melbourne scare.

Frustrations at Australia's insipid vaccine rollout are growing, with Peter Hoysted writing in The Australian that:

"Right now the only incentive for Australians to vaccinate is common sense... To date there has been no government advertising campaign. There is little or no incentive to vaccinate, limp attempts to inform the vaccine hesitant and no evidence-based kicks for the anti-vaxxers.
...
The relatively minor issues associated with the AZ [and the availability the Pfizer vaccine] notwithstanding, it's almost as if the vaccine roll out has been designed to be slow and fraught with difficulties."

Hoysted noted that some of the messaging in particular has been "incredibly irresponsible", citing an example from last week when the ABC's resident expert, Norman Swan, claimed on ABC radio "that if it were not for the pandemic, the AstraZeneca vaccine would probably be taken off the market".

Why this matters: ABC radio has more listeners in the 65+ age group than in any other demographic. They're also in the so-called "vulnerable" demographic, meaning the benefits of AstraZeneca – which is very effective at preventing COVID-19 hospitalisation and death – far outweigh the extremely low odds of rare blood clots. Given their high priority status ("Phase 2a"), vaccine hesitancy in this group will slow the rollout and ultimately delay Australia's reopening.

An ineffective campaign: Other than the slow start (Australia didn't order any Pfizer doses until November 2020), lack of vaccination incentives and constantly changing advice, Australia may have its approach entirely backwards. There's growing evidence that after vaccinating the vulnerable (e.g. aged care) and front-line workers (e.g. health care), socially active people – i.e. the young – should be prioritised because according to epidemiologist Mary-Louise McLaws, "they were most likely to catch and spread the disease".

A recent study in the Royal Society Open Science journal concluded that giving half the doses to high-risk people and the other half to "core-sociable ones", would lead to "considerably greater reduction in deaths", than focusing on older age groups. Those results were similar to the findings of a new study from Iceland, which showed that "vaccinating in order of ascending age or uniformly at random would have prevented more infections per vaccination than vaccinating in order of descending age".

Let them wait: Australia ranks last out of the 37 OECD nations in terms of the percentage of the population fully vaccinated. If Boomers (aged ~57-75) are going to drag their feet, they can wait, but don't let them get in the way of everyone else. It's time to open up vaccinations to everyone – when a random distribution would have performed better than your strategy, what's there to lose?


The Wrap Up

  • RIP John McAfee, who was found dead in a Spanish jail only hours after a court approved his extradition to the US.
  • Morgan Stanley will require its New York employees to be fully vaccinated against COVID-19 before returning to the office.
  • Labor backbencher Joel Fitzgibbon criticised his party's ties to the Greens after the Senate blocked a change of rules at the Australian Renewable Energy Agency, which would have allowed it to invest in "all sorts of other innovation, including electric vehicle charging station roll outs, and improving the efficiency of heavy vehicles and capturing the carbon so that we can use gas and coal to generate energy without polluting the atmosphere".
  • Australia's Justis Huni will miss the Tokyo Olympics after aggravating a hand injury against Paul Gallen.
  • Michael Vaughan said the Ashes should be called off if England players' families cannot join them during the Ashes later this year. Kevin Pietersen said he will give his "full backing" to any English player that withdraws.
  • "A family of home sellers in Sydney’s northwest have pocketed nearly $400,000 profit over just 10 months despite doing close to nothing to improve their rundown property." Does that sound like a healthy, well functioning market? 🤔
  • Hong Kong's pro-democracy tabloid, Apple Daily, has shut down. Its assets were frozen last week and the chief editor and five other executives remain in police custody.
  • Brave, the creator of the namesake free, open-source and privacy-focused web browser, now has its own search engine.

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